Abuse of Dominant Position in Competition Law

“Dominant Position” as explained in the Competition Act, 2002, refers to a position enjoyed by an enterprise in the Indian market that enables it to “ act independently of forces prevailing in the relevant market” or “affect its competitors or consumers or the relevant market in its favour”.

Abuse of dominant position refers to an imposition of unfair or discriminatory pricing on part of the enterprise in the dominant position in a bid to eliminate its competitors who inevitably end up refraining from investing in the particular market. Abuse of dominant position can negatively impact not just competitors but also consumers in the long run.

The Competition Act, 2002 defines abuse of dominant position as-
“4. [(1) No enterprise or group shall abuse its dominant position.]
(2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a group].—-
(a) directly or indirectly, imposes unfair or discriminatory—

(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or service.”1

One of the latest cases brought before the Competition Commission of India (CCI) with regards to abuse of dominant position is that of Star India and Thiruvananthapuram Entertainment Network.
Star India (Star India Private Limited), one of the most popular entertainment companies in the world, has been accused of anti-competitive practices and abuse of market dominance by a Kerala based entertainment company, Thiruvananthapuram Entertainment Network (P) Ltd.

According to the CCI order, Thiruvananthapuram Entertainment has been supplying signals for various channels, including those of Star India, and has to enter into agreements with Star India for a set of channels, for a pecuniary consideration, which appreciates periodically.

The allegation against Star India is that the agreements entered into with various channel distributors, including the complainant, are anti-competitive. It is alleged that these agreements, entered into with Thiruvananthapuram Entertainment, over time, started showing price discrimination with Star India demanding more money for its set of channels, which were allegedly being provided to other market competitors for lower prices.

After Star India acquired Asianet Communication Ltd2 , a major Malayalam channel owner, and took over its channels, the complainant claims that Star India started charging a hefty license fee, as compared to other big players, for the subscription of its channels. Thiruvananthapuram Entertainment alleges that this was done in a bid to eliminate small-scale broadcasters in order to create a monopoly of bigger companies.

The CCI has asked for additional information in the matter and is assessing the matter.

Star India has denied all allegations and rather than providing specific information, has said that it has to compete with 800+ channels registered with the Ministry of Information and Broadcasting which are being aired in the State of Kerala amongst immense competition.3

The competition watchdog has ordered a probe against the alleged abuse of dominant position against Star India.4

References

1.S.4, The Competition Act, 2002, No. 12, Acts of Parliament, 2002 (India)

2.Star buys majority in Asianet; forms JV with Rajeev Chandrasekhar, REUTERS (Nov 17, 2008 3:18 PM) https://in.reuters.com/article/idINIndia-36543120081117

3.Competition Commission orders probe against Star India, THE HINDU (Dec. 30, 2017 12:57 AM) http://www.thehindu.com/news/national/kerala/competition-commission-orders-probe-against-star-india/article22331327.ece

4.News Alert- CCI- Star India, THE NEW INDIAN EXPRESS (Dec. 29, 2017 06:16 PM) http://www.newindianexpress.com/pti-news/2017/dec/29/newsalert-cci-star-india-1739741.html

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